Kenya sugar sector could face crisis

December 4, 2009

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By CORRESPONDENT, KISUMU, Kenya, Dec 4 – Kenya’s sugar sector is headed for a crisis after the end of the COMESA safeguard period if the much awaited reforms are not drastically implemented ahead of the deadline in 2012.

Kenya Sugar Cane Millers Association Chairman Evans Kidero said that the expiry of the grace period is fast approaching and the anticipated reforms in the sugar sector are yet to be felt.

“The country is not fully prepared for the expiry of the COMESA safeguard measures and that may impact negatively on the farmers and millers,” said Mr Kidero who’s also the Mumias Sugar Company Managing Director.

He said that although the government’s privatisation strategy is a way of getting the sector out of the woods, he feared that the process might be time barred as many hurdles are still facing it.

Speaking in Kisumu during Mumias Sugar Company’s Annual General Meeting, the MD said that the effects of the global financial recession coupled with a generally diminished investor appetite may make it challenging to sell the targeted factories.

Whereas the privatisation measures were meant to make them viable, the process had not kicked off in earnest as anticipated.

“Sucrose based payment which was to be undertaken under the reforms is yet to be implemented much to the disappointment of farmers. The recent price directives have seen farmers agitating for higher payments for weight delivered, this is not sustainable in the long run hence the need to fast track the desired reforms,” he said.

Mr Kidero further pointed out that the influx of duty free sugar into the country would make Kenyan sugar less competitive due to the current high production costs.

The government has also failed to clearly regulate the sugar importation in the country, he further complained.

“The sugar import auction rules have not made the situation any better,” he said adding that undeclared sugar continues to come into the country through the Mombasa port and the porous Kenya-Somali border.

He reiterated that there is need for the government to focus its efforts on the survival initiatives for the sugar sector.

The MD said that cane production has hampered the performance of many sugar factories including Mumias Sugar Company which experienced a 10 percent reduction in the total sugar tones.